Bankruptcy Basics provides basic information to debtors, creditors, court personnel, the media, and the general public on different aspects of the federal bankruptcy laws. It also provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed and to answer some of the most commonly asked questions about the bankruptcy process. Bankruptcy is a process where debts are legally eliminated from ones life. The court is the only one that can grant or deny a petition for Bankruptcy. It does this by reassuring creditors their debts will be repaid and also the individual that they will not lose everything they have. It also takes the pressure received off the debtor knowing that the debt won’t ruin or take over their life.

Bankruptcy is a legal process through which people and businesses can seek to obtain a fresh financial start when they are having financial difficulties and are unable to pay their debts as agreed. When a business files bankruptcy it can be for one of two reasons. One, they actually mean to liquidate and close their doors or two, they are buying themselves more time with their creditors to be able to pay off existing debts. When a person files for bankruptcy, a court eliminates either or part of the existing debts under types of chapter in which they came.

The process is also designed to provide a measure of protection to creditors. Secured creditors are often in a better position than unsecured creditors because they hold lien on the property of the debtor that supports the right to payment.

Whole your bankruptcy case is pending, most creditors cannot try to collect their debts from you directly. They also may not attempt to collect any and all discharged debts excused by the court. However, not all debts are discharged.

There are several causes of bankruptcy. Approximately 90 percent are the result of unemployment, medical bills, or divorce. Every individual situation is different, though a common feature of many bankruptcies are a large amount of debt or credit cards with high interest rates. Filing for bankruptcy is a very personal, serious decision. Most people file when they see no other way out of debt. Once the decision has been made, the company or individual may declare bankruptcy by petitioning the court. This is a request for protection and relief under the bankruptcy code. The person filing for bankruptcy must provide information about his and her assets, liabilities, income, and expenditures. They also must verify that they have undergone credit counseling within the allotted time.

Bankruptcy stops most garnishments, although it depends on why you’re being garnished. What you will be allowed to keep will depend largely on your state laws. Some states allow you to keep all of the equity in your home, while others exempt a certain amount.

There are several Advantages to Filing Bankruptcy:

• A fresh start to your financial life • Collection efforts are stopped upon filing • Stops wage garnishments • Can keep all or at least some of the equity in your home

There are also some Disadvantages to Filing Bankruptcy:

• Stays on credit record for years to come • Makes getting credit harder if not impossible • May lower opinion of ones self worth

If you decide to file, you definitely need an experienced bankruptcy attorney. Steer clear of petition preparers, typing services or paralegals. And if you are even considering filing on your own, remember the old adage that a man who acts as his own attorney has a fool for both an attorney and a client.